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Tuesday, October 22, 2013

Chicago Stealing from Poor, Giving to Rich

Chicago, like New York City, is becoming a microcosm of California, a two-tiered society where public policy props up and privileges the tastes of the rich while ignoring the needs of the poor. A new piece in City Journal explains that Mayor Rahm Emanuel’s ostensibly painful and difficult cuts to services like public safety and schools are actually more like a diversion of funds from blighted residents to wealthy ones. Hundreds of millions of dollars have been used to fund a bike share program, a “riverwalk”, a hiking trail, and (what else?) a sports arena, even as Chicago public education and law enforcement sectors are facing deep crises.

City Journal explains that Mayor Emanuel is relying on something called Tax Increment Financing (TIF) subsidies to fund upper-class projects at the expense of basic social services, in the hopes of luring in new wealthy residents and keeping the ones who are thinking about moving:

Chicago’s TIF program has long been criticized as a mayoral slush fund. Ostensibly a tool for redeveloping blighted neighborhoods, TIF enables any new tax dollars generated in a district—the so-called “increment”—to be fed back into a special fund that can only be spent in that district. This projected revenue stream can be used to back bonds to finance infrastructure and jump-start development. At least, that’s the theory. Many of Chicago’s most prosperous neighborhoods are located in TIF districts and have generated huge incremental revenues. The Central Loop TIF district took in nearly $1 billion over its lifetime. When the district was slated to expire due to a statutory sunset, the city created the giant LaSalle Central TIF—covering a booming part of the West Loop—to replace it. None of the taxes from new developments in these districts flows automatically to police, libraries, parks, or schools. The funds go into the city’s TIF account, and the mayor has discretion on how they’re spent. Some TIF funds have been used for construction of new schools, but more than half have been handed out as subsidies to private businesses. The true purpose of Chicago’s TIF districts—which now take in about $500 million per year—appears to be tending to high-end residents, businesses, and tourists, while insulating them from the poorer segments of the city.